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Budget Resolutions and Economic Situation

It is a great pleasure to follow my constituency neighbour, my hon. Friend the Member for Bournemouth, East (Mr. Ellwood). He made some points that were extremely pertinent not just generally but to my constituency in particular, which relies heavily on the tourism industry. Obviously, many people who go and stay in Bournemouth will spend quite a lot of their time in Christchurch, and vice versa. It is a great privilege to speak in this debate. I will begin with a similar point to the one made by my hon. Friend the Member for Tatton (Mr. Osborne) when he opened the debate this afternoon. He talked about the Government's sleight of hand in not allowing an increase in personal allowances this year, which will affect 30 million people in employment. Is it not a surprise that the Government did not want to give that a fanfare and spell it out in the first few words of the Budget statement. I suppose that they are hoping that people will not notice until later in the year. That brings me to the issue of personal allowances. In my view, the concept of a personal allowance is this: every person should have a starting point for tax, enabling them to keep enough money to live a normal life, without extravagances or anything like that, and to meet their basic needs, before they have to start paying taxation—before the Government say, "We need a contribution from you!" Back in 1952—you and I, Mr. Deputy Speaker, may just recall the situation then—income tax came into effect only when a person's income reached 103 per cent. of average earnings. Today, however, when average earnings are £23,500 a year—taking the public sector average in December of £457 a week and relating it to the private sector average in December of £448 a week—the personal allowance is £6,475. In my submission, that is far too low, because nobody can live on £6,475. That is recognised by those who support the national minimum wage. It was announced in the Budget papers that the national minimum wage will increase in the autumn. That means that somebody on the national minimum wage working 40 hours a week will receive more than £12,000. Why, if they are getting the minimum wage, should they have to pay tax on £5,500 of that money?